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Accounting alert 2009/07 - June AASB meeting

The AASB's meeting largely consisted of the AASB taking a 'watching brief' on the various projects of other accounting standard setters.

In addition, the AASB continued to develop its differential reporting proposals and made two amending standards to introduce a number of editorial corrections to various accounting standards.

A high-level summary of the matters discussed at the meeting is presented in the tables below.

Sector-neutral matters

Topic Overview Comments and more information
Corrections to standards The Board made AASB 2009-6 Amendments to Australian Accounting Standards (applicable to annual reporting periods beginning on or after 1 January 2009 that end on or after 30 June 2009) and AASB 2009-7 Amendments to Australian Accounting Standards (applicable to annual reporting periods beginning on or after 1 July 2009).

These standards make a number of editorial corrections to standards and are unlikely to have any substantive effect.

Agenda Paper 12.2 AASB 2009-X Amendments to Australian Accounting Standards (PDF 633kb)

Agenda Paper 12.5 AASB 2009-Y Amendments to Australian Accounting Standards [AASB 5, 7, 107, 112, 136 & 139 and Interpretation 17] (PDF 584kb)

Share-based payment

The Board agreed to make, out of session, an amending standard to replicate the recent amendments to IFRS 2 Share-based Payment. Interpretations 8 and 11 will also be withdrawn.

The amendments will be effective for annual periods beginning on or after 1 January 2010 and must be applied retrospectively.

The amendments clarify the accounting for group cash-settled share-based payment transactions. An entity that receives goods or services in a share-based payment arrangement must account for those goods or services no matter which entity in the group settles the transaction, and no matter whether the transaction is settled in shares or cash.

The amendments to IFRS 2 also incorporate guidance previously included in IFRIC 8 Scope of IFRS 2 and IFRIC 11 IFRS 2 - Group and Treasury Share Transactions.

IASB Press Release (PDF 103kb)

IAS Plus Project page

Differential reporting

The AASB considered the meaning of 'holding assets in a fiduciary capacity' in the definition of publicly accountable entities and decided to include additional Australian examples that are 'deemed' to be publicly accountable.

The Board also considered the possible future differential reporting framework in New Zealand.

The ambiguity in meaning may result in uncertainties in interpretation of the IASB's definition. Accordingly, clarification on this matter is welcomed, particularly as the implementation of any 'IFRS for SMEs' in each country is considered a jurisdictional matter.

Disclosing entities under the Corporations Act 2001 should clearly use 'full' IFRS. However, we continue to have reservations about any widening the mandatory scope of 'full' IFRS in the event that the AASB decides to proceed with an IFRS for SMEs.

We also strongly support a closer integration and alignment between the reporting regimes in Australia and New Zealand to achieve greater consistency and to lessen red tape for entities operating in both countries.

Financial instruments

The Board:

  • Held an in private education session with representatives from the Australian Bankers' Association , ASIC and APRA on the IASB's proposals to replace IAS 39
  • Considered its submission on the IASB's derecognition proposals
  • Agreed to issue an Invitation to Comment on the IASB's Discussion Paper on credit risk in liability measurement.

The IASB's fast-track project to simplify and improve IAS 39 is progressing quickly. An exposure draft is expected on classification and measurement in the coming months, with a final standard expected by the end of the year.

IASB meeting summary (June 2009)

IAS Plus project page

IASB project page

Leases The AASB considered its draft submission on the IASB's Discussion Paper on leases, deciding to express general support for the proposals.

The lease project promises significant change in accounting for leases. There are a number of issues and changed outcomes from the proposals, e.g. all leases on balance sheet, consequential impacts on EBITDA, the 'up fronting' of expenses and the recognition of liabilities even though there is optionality in renewals.

IAS Plus Newsletter (PDF 129kb)

Agenda Paper 9.4 Submissions received for ITC 20 Request for Comment on IASB Discussion Paper DP/2009/1 Leases - Preliminary Views (PDF 2.79MB)

Income tax The Board considered its initial response to the IASB's proposals in ED/2009/2 Income Tax, tentatively deciding to recommend a fundamental review of income tax accounting be undertaken rather than proceeding with the proposals in the ED.

We support the Board's conclusions on the ED. The significant issues arising, such as accounting for uncertain tax positions, recognition of deferred taxes in relation to domestic subsidiaries (especially in tax-consolidated groups) and a counterintuitive calculation methodology.

Joint Accounting and Tax alert on the ED

Interpretations The Board asked staff, in conjunction with the NZ FRSB staff, to again contact IASB staff on whether entities can be key management personnel (KMP) in accordance with IAS 24 Related Party Disclosures. The long running and vexed issue of whether an entity can be a KMP remains unresolved and accordingly this Board initiative is to be welcomed.
Management commentary The Board decided to place IASB ED/2009/6 Management Commentary on its website and request comment. The IASB's ED will not result in an Accounting Standard and it is unclear how this possible pronouncement might be implemented in the Australian context.


Not-for-profit matters

Topic Overview Comments and more information
GAAP/GFS harmonisation In light of constituent comment, the Board decided that it would not be appropriate to impose GAAP/GFS harmonisation requirements on entities within the GGS.

The AASB will liaise with the FRC on this matter as ED 174 proposing this change was as a result of a FRC directive.

Agenda Paper 7.5 Submissions from constituents on ED 174 Amendments to AASB Standards to facilitate GAAP/GFS Harmonisation for Entities within the General Government Sector (PDF 3.1MB)

IPSASB IFRS convergence project The IPSASB has released a number of exposure drafts to update convergence of IPSASs with IFRSs. The AASB considered draft submissions on a number of EDs. The IPSASB project provides the possibility of changes to public sector entity reporting (see policies and procedures below).


Administrative and other matters

Topic Overview Comments and more information
Policies and procedures The Board considered a revised draft AASB Statement of Policies and Procedures for the development of Standards and Interpretations. The policies are expected to contain the aspiration goal of moving public sector (and possibly not-for-profit private entities) to be based on the IPSASB series of standards.
IPSASB report The AASB received a report on the IPSASB May meeting. -


More information on the above topics can be obtained from the AASB Action Alert (PDF 51kb) for the meeting.

The next meeting of the AASB is scheduled for 29-30 July 2009 in Melbourne.

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